In its base case, the report expects India’s real GDP growth to moderate to 7.1 percent in FY27, which is still healthy and slightly higher than expected.
Growth will be supported by strong private consumption and a modest pick-up in private investment.
According to the report, the attractiveness of private investment is improving with the recovery in private investment, driven by emerging sectors.
It also expects export growth to maintain momentum, supported by lower US tariffs than in FY26, steady global growth and stronger services exports even as front-loading benefits fade.
Retail inflation is likely to pick up to an average of 4.3 percent in FY27 from an estimated 2.5 percent in FY26. As food prices are expected to remain soft, with a normal monsoon in 2026, inflation should normalize from current lows.
“The reduced weight of food in the new CPI 2024 series should have an upward component to the headline from normalizing food inflation.” The report added. This will allow the central bank to maintain the repo rate and focus on the transition to the 125 bps rate cut implemented in 2025, Crisil said.
The report expects policy rates to remain stable in FY27; A cumulative rate cut of 125 bps in 2025 will continue to trickle down to bank lending and deposit rates.
“We also expect the RBI to remain active in liquidity management. We expect fiscal conditions to remain accommodative in FY2027 amid supportive monetary policy and strong macro fundamentals.”
